Currently, several financial management systems are available to help an individual user, or an authorized party acting on behalf of an individual user, obtain a user's financial data, process/analyze the user's financial data, and generate various reports for the user.
Financial management systems typically help users manage their finances by providing a centralized interface with banks, credit card companies, and other various financial institutions, for electronically identifying and categorizing user financial transactions. Currently, financial management systems typically obtain electronic transaction based information, such as payee, payment amount, date, etc. via communication with banks, credit card providers, or other financial institutions, using electronic data transfer systems such as the Open Financial Exchange (OFX) specification, or various other systems for transferring financial transaction data.
Typically a financial management system's ability to identify and categorize specific financial transactions is what allows the financial management system to provide the features that are of interest to the user. Typically, the ability to categorize specific financial transactions is, in turn, dependent on an ability of the financial management system to obtain the data necessary to identify and categorize specific financial transactions.
Using some currently available financial management systems, the electronic financial transaction data, such as payee, if available, payment amount, date, etc. associated with a specific financial transaction is used by the financial management system to propose, and/or apply, a category for a specific financial transaction. As an example, if a given transaction has “Safeway Stores” as the payee, the financial management system may propose a category of “groceries” for the financial transaction based solely on the payee being a grocery store. While this type of automatic categorization of a financial transaction based on payee name can be effective, the accuracy and/or reliability of such a categorization system is limited by the fact that the payee associated with a given financial transaction is not always known/discernable from the available financial transaction data, and the fact that some payee names can be misleading.
For example, a payee name associated with a financial transaction may be absent altogether, coded, or represent the name of a parent company that indicates nothing about the actual merchant or products purchased.
In addition, some payee names are misleading and can easily confuse an automatic categorization system. For example, a fast food restaurant having a 50's drive through theme may be named “The Auto Shop” or “Pit Stop.” In this case, a currently available automatic categorization system is likely to categorize the transaction as an automotive expense based on the payee name, as opposed to the proper categorization as a food/dinning expense.
As a result of the current situation, and limitations of current automatic categorization systems, while the automatic methods of categorization of financial transactions currently available may help, they are often inaccurate and fail to accurately and reliably categorize many financial transactions. Unfortunately, in most cases, the correction of an incorrect automatic categorization of a given financial transaction takes more user time than it would have taken to manually enter the correct categorization of financial transaction in the first place. This is particularly problematic given that experience has shown that, an average user is far more likely to adopt, and continue to use, any financial management system if the amount of manual data entry, i.e., data entry made via any user interface device, such as a keyboard, a mouse, a touch pad, or any other device that requires input from the user, is minimized. Consequently, it is desirable to eliminate as many incorrect automatic categorizations of financial transactions as is possible for at least this reason. In addition, anytime correction of an automatic categorization of financial transaction is required, there is an opportunity for error introduction. Consequently, for this reason as well, it is highly desirable to minimize incorrect automatic categorizations of financial transactions.